India’s climate-tech challenge: Bridging the Industry-incubator gap

The ongoing conflict in West Asia with regard to the energy-supply disruptions around the Strait of Hormuz is a reminder of why India must accelerate the scale up of climate tech. Innovations in renewable energy and bio-circular materials are critical to reduce the country’s vulnerabilities to geopolitical shocks, secure national interests and achieve resilient and sustainable growth.

A CEEW study estimates that green opportunities can add $ 1.4 trillion annually to our GDP starting 2047. India has no shortage of innovators and entrepreneurs willing to give it a shot. The gap exists within our inability to explore newer avenues of collaboration between industry and start-up incubation systems to help climate-tech startups scale and endure.

According to a Tracxn report, India's climate-tech funding has grown roughly 8x in five years, to $ 2.6 billion in 2025 from $ 315 million in 2020. Most of this capital is concentrated in large cheques, as is also the global trend. The challenge is to build investor confidence in funding the rounds between seed and growth-stage capital. Two-thirds of funded climate-tech start-ups raise only a seed round, and fewer than 3% go on to a Series B or beyond. This means that over 97% never reach growth-stage capital.

Why does capital hesitate with respect to climate-tech? To bring a product to market, climate-tech entrepreneurs must navigate a complex web of challenges: high upfront capital costs, intricate manufacturing processes and global supply chains, a weak or underdeveloped regulatory framework, and competitive product pricing. Picture a founder making compostable packaging from crop residue rather than virgin plastic, the tech for which is fast evolving. They would be required to co-ordinate a fragmented domestic feedstock supply chain, ensure product consistency across batches of crop residues, obtain CPCB certification and yet will have to compete on price with decades-advantaged single use plastics.

This results in reduced investor confidence and what practitioners call "death by pilots". Start-ups may have proven their technology in controlled environments but struggle to secure the first deployment and market assurances necessary to unlock the next funding round. The solution lies in fostering greater collaboration between large corporates and incubators to develop a new model of climate-tech incubation that can unlock greater investment.

Incubators need to take a step forward from their current modus operandi of providing mentorship and support services; and industry needs to take a step back from treating startups like just another vendor. A step forward for incubators entails supporting founders in engaging with corporates. This ranges from identifying test environments, to co-designing problem statements with corporates and negotiating procurement pathways. A step-back for corporates would be to work with incubators to support promising but nascent start-up innovations, and not just engage with a start-up once a product is proven, priced and ready to buy. This model of ‘new-age incubation’ is elaborated in the recommendations below.

First, structured access to real operational environments that climate-tech requires. In a recent conversation, Ossus, a startup that uses microbes to turn the organic pollutants in industrial wastewater into green hydrogen, said, “Surviving the valley of death required early industry validation. Tata Steel gave us our first opportunity to validate the technology on site, and an early demonstration to Shell helped us win customers.” The NS Raghavan Centre for Entrepreneurial Learning (NSRCEL) at IIM Bangalore has partnered with Maruti Suzuki to enable corporate access for relevant startups in the mobility sector. Similarly, all incubators must evolve to onboard industry partners who can provide these real operational environments.

Second, co-designed problem statements that are grounded in real operational challenges. When startups define problem statements based on a presumed market opportunity, they build solutions that are technically sound but commercially misaligned. The incubator-industry partnership must therefore begin upstream, where incubators structure their intake on real, specific, unsolved operational challenges provided by industry partners. This is the model that NSRCEL's Climate Incubation Hub with HUL has begun to establish: industry partners define the problem space, and startups are selected and supported specifically to address it. India's incubators must make co-designed problem statements a standard feature of industry partnership agreements, not an occasional outcome of good luck.

Third, better procurement guarantees and pathways. In the experience of Recore, a startup that creates bio-fibre based seat covers for automotive use, “Large industry players are driven by price sensitivity and risk aversion, making them hesitant to be the first to pilot a novel material.” At times, well-defined problem statements alone are not enough to translate to industry-led procurement. Hardware failures, unlike software, can prove to be expensive and result in trust deficit among the industry. Incubators can serve as intermediaries to address the ‘trust deficit’ through negotiations on payment milestones and reputation led guarantees. Globally, Greentown Labs, the world's largest climate tech incubator, has supported over 675 startups with an 88% survival rate. Its startups have collectively raised $ 12.5 billion in funding owing to a corporate partner model, in which firms like Shell, Chevron, and Emerson serve as both sponsors and first customers.

India’s climate-tech success should be measured by the long-term profitability and endurance within real markets rather than their seeding. The urgency with which ecosystem players reshape their roles will determine our true growth resilience.

(The views expressed are personal)